Note 8.

Investments

The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and amortized cost of the Company’s investments, aggregated by type and industry, as of June 30, 2016 and December 31, 2015.

Investments were comprised of the following:

	June 30, 2016
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	16,040	$	519	$	1	$	15,522
Obligations of states and political subdivisions		18,446		1,182		-		17,264
Corporate securities:
Utilities and telecom		20,527		2,184		182		18,525
Financial services		56,392		3,018		950		54,324
Other business – diversified		66,368		2,564		3,016		66,820
Other consumer – diversified		30,613		1,189		606		30,030
Total corporate securities		173,900		8,955		4,754		169,699
Redeemable preferred stocks:
Financial services		254		4		-		250
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		447		4		-		443
Total fixed maturities		208,833		10,660		4,755		202,928
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,675		711		-		964
Financial services		5,736		908		-		4,828
Other business – diversified		217		170		-		47
Other consumer – diversified		12,800		7,186		-		5,614
Total equity securities		20,428		8,975		-		11,453
Other invested assets		5,777		-		-		5,777
Policy loans		2,179		-		-		2,179
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	238,493	$	19,635	$	4,755	$	223,613

	December 31, 2015
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	22,234	$	290	$	175	$	22,119
Obligations of states and political subdivisions		25,479		621		552		25,410
Corporate securities:
Utilities and telecom		17,589		1,357		692		16,924
Financial services		54,035		1,797		1,351		53,589
Other business – diversified		60,960		729		5,898		66,129
Other consumer – diversified		24,581		136		1,391		25,836
Total corporate securities		157,165		4,019		9,332		162,478
Redeemable preferred stocks:
Financial services		253		3		-		250
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		446		3		-		443
Total fixed maturities		205,324		4,933		10,059		210,450
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,386		422		-		964
Financial services		5,175		847		-		4,328
Other business – diversified		198		151		-		47
Other consumer – diversified		16,372		10,758		-		5,614
Total equity securities		23,131		12,178		-		10,953
Other invested assets		6,454		-		-		6,454
Policy loans		2,200		-		-		2,200
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	238,385	$	17,111	$	10,059	$	231,333

Bonds having an amortized cost of $11,151 and $11,259 and included in the tables above were on deposit with insurance regulatory authorities at June 30, 2016 and December 31, 2015, respectively, in accordance with statutory requirements.

The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2016 and December 31, 2015 by contractual maturity were as follows. Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	June 30, 2016				December 31, 2015
	Carrying Value		Amortized Cost		Carrying Value		Amortized Cost
Due in one year or less	$	2,659	$	2,648	$	4,143	$	4,113
Due after one year through five years		21,768		21,407		20,557		20,591
Due after five years through ten years		108,477		105,847		99,614		103,066
Due after ten years		74,755		72,030		79,882		81,684
Varying maturities		1,174		996		1,128		996
Totals	$	208,833	$	202,928	$	205,324	$	210,450

The following table sets forth the carrying value, amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of June 30, 2016 and December 31, 2015.

	June 30, 2016							December 31, 2015
	Carrying Value		Amortized Cost		Unrealized Gains (Losses)			Carrying Value		Amortized Cost		Unrealized Gains (Losses)
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	16,040	$	15,522	$	518		$	22,234	$	22,119	$	115
Obligations of states and political subdivisions		18,446		17,264		1,182			25,479		25,410		69
Utilities and telecom		22,202		19,489		2,713			18,975		17,888		1,087
Financial services		62,382		59,402		2,980			59,463		58,167		1,296
Other business – diversified		66,585		66,867		(282	)		61,158		66,176		(5,018	)
Other consumer – diversified		43,606		35,837		7,769			41,146		31,643		9,503
Other investments		9,232		9,232		-			9,930		9,930		-
Investments	$	238,493	$	223,613	$	14,880		$	238,385	$	231,333	$	7,052

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of June 30, 2016 and December 31, 2015.

	June 30, 2016
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	2,020	$	1	$	-	$	-	$	2,020	$	1
Corporate securities		14,804		287		32,997		4,467		47,801		4,754
Total temporarily impaired securities	$	16,824	$	288	$	32,997	$	4,467	$	49,821	$	4,755

	December 31, 2015
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	9,209	$	120	$	2,243	$	55	$	11,452	$	175
Obligations of states and political subdivisions		16,079		552		-		-		16,079		552
Corporate securities		79,482		4,284		16,131		5,048		95,613		9,332
Total temporarily impaired securities	$	104,770	$	4,956	$	18,374	$	5,103	$	123,144	$	10,059

The evaluation for an other than temporary impairment is a quantitative and qualitative process, which is subject to risks and uncertainties in the determination of whether declines in the fair value of investments are other than temporary. Potential risks and uncertainties include, among other things, changes in general economic conditions, an issuer’s financial condition or near term recovery prospects and the effects of changes in interest rates. In evaluating a potential impairment, the Company considers, among other factors, management’s intent and ability to hold the securities until price recovery, the nature of the investment and the expectation of prospects for the issuer and its industry, the status of an issuer’s continued satisfaction of its obligations in accordance with their contractual terms, and management’s expectation as to the issuer’s ability and intent to continue to do so, as well as ratings actions that may affect the issuer’s credit status.

As of June 30, 2016, there were thirty-six securities in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the other diversified business, other diversified consumer, utilities and telecom and financial services sectors. Securities in an unrealized loss position reported in the other diversified business sector included gross unrealized losses of $2,313 related to investments in fixed maturities of ten different issuers, all related to the oil and gas industry. The oil and gas investee companies represent a diversified group of businesses which include, among others, refiners, pipeline owners and operators, deep water offshore rig owners and operators, all of which we believe are in continuing stages of rationalizing their current investments, future capital expenditures and assessing capital and liquidity requirements. To our knowledge, the companies are continuing to assess and revise short-term, intermediate and long-term business plans in response to the current trends in oil and gas markets. While these companies have generally experienced credit downgrades or may be currently under credit rating review, the Company believes that many of the downgrades are in response to external market forces and not necessarily specific credit events of any obligor which would currently indicate that an other than temporary impairment need be recorded. All of the investees have continued to make regular interest payments on their debt when and as due and the Company continues to perform in-depth analysis of the financial disclosures of each of the investees on a regular basis. The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of June 30, 2016.

The following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.

Level 1

Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. The Company’s financial instruments valued using Level 1 criteria include cash equivalents and exchange traded common stocks.

Level 2

Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include significantly all of its fixed maturities, which consist of U.S. Treasury securities and U.S. Government securities, obligations of states and political subdivisions, and certain corporate fixed maturities, as well as its non-redeemable preferred stocks. In determining fair value measurements using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers, in establishing the fair value of its fixed maturities and non-redeemable preferred stocks. Prices for the majority of the Company’s Level 2 fixed maturities and non-redeemable preferred stocks were determined using unadjusted prices received from pricing services that utilize a matrix pricing concept, which is a mathematical technique used widely in the industry to value debt securities based on various relationships to other benchmark quoted prices.

Level 3

Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources. The Company’s financial instruments valued using Level 3 criteria consist of a limited number of fixed maturities. As of June 30, 2016 and December 31, 2015, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,368 and $2,237, respectively. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

As of June 30, 2016, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
	(Level 1)		(Level 2)			(Level 3)			Total
Assets:
Fixed maturities	$	-	$	206,465		$	2,368	⁽¹⁾	$	208,833
Equity securities		14,938		5,490	⁽¹⁾		-			20,428
Cash equivalents		12,535		-			-			12,535
Total	$	27,473	$	211,955		$	2,368		$	241,796

⁽¹⁾

All underlying securities are financial service industry related.

As of December 31, 2015, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
	(Level 1)		(Level 2)			(Level 3)			Total
Assets:
Fixed maturities	$	-	$	203,087		$	2,237	⁽¹⁾	$	205,324
Equity securities		18,245		4,886	⁽¹⁾		-			23,131
Cash equivalents		13,772		-			-			13,772
Total	$	32,017	$	207,973		$	2,237		$	242,227

⁽¹⁾

All underlying securities are financial service industry related.

The following tables provide a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month and six month periods ended June 30, 2016 and 2015.

	Fixed Maturities
Balance, December 31, 2015	$	2,237
Total unrealized gains included in other comprehensive income		63
Balance, March 31, 2016		2,300
Total unrealized gains included in other comprehensive income		68
Balance, June 30, 2016	$	2,368

	Fixed Maturities
Balance, December 31, 2014	$	2,214
Total unrealized gains included in other comprehensive income		50
Balance, March 31, 2015		2,264
Total unrealized losses included in other comprehensive loss		(57	)
Balance, June 30, 2015	$	2,207

The Company’s fixed maturities valued using Level 3 inputs consist solely of issuances of pooled debt obligations of multiple, smaller financial services companies. They are not actively traded and valuation techniques used to measure fair value are based on future estimated cash flows (based on current cash flows) discounted at reasonable estimated rates of interest. There are no assumed prepayments and/or default probability assumptions as a majority of these instruments contain certain U.S. government agency strips to support repayment of the principal. Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable.

The following table is a summary of realized investment gains (losses) for the three month and six month periods ended June 30, 2016 and 2015.

	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016			2015
Gross gains	$	132	$	4,502		$	954		$	5,458
Gross losses		-		(354	)		(70	)		(359	)
Realized investment gains, net	$	132	$	4,148		$	884		$	5,099